Most people working as an employee in the UK have a UK employer, or are attached to a business in the UK which is treated as their employer, who is then legally responsible for deducting Class 1 National Insurance from their pay.
Where there is no business in the UK (or in the European Economic Area (EEA)) responsible for deducting National Insurance, the employee must pay his or her own Class 1 National Insurance to HM Revenue & Customs (HMRC).
Certain Embassies, High Commissions, Consulates and international organisations are exempt from operating National Insurance. They may have also obtained exemptions from National Insurance for their employees who are not UK nationals and who do not permanently reside in the UK. Employees not covered by the exemptions have to account for Class 1 National Insurance to HMRC.
If your contractual employer does not have a place of business in the UK, there may be another business in the UK that is treated as your employer for National Insurance purposes:
From 1 May 2010, an employer in another European Union (EU) Member State will also be treated as being UK registered or having a place of business in the UK for National Insurance purposes where the employee is in UK National Insurance. From 1 April 2012 this will also be the case for employers based in Switzerland, from 1 June 2012 employers based in Norway, Iceland or Liechtenstein, and from 1 July 2013 employers based in Croatia.
If an employer has obligations in the UK then HMRC will agree for another part of the business based in the UK, for example part of the business responsible for operating PAYE Income Tax deductions or an agent, to act on behalf of that employer.
Where you have no employer in the UK or business treated as your employer, you will be responsible for paying your own employee Class 1 National Insurance, through a Direct Payment Scheme, to HMRC.
There are special rules if you are an employee of an Embassy, High Commission or Consulate of another EEA country and also a national of that country. The other EEA countries are:
Austria, Belgium, Bulgaria, Croatia, Denmark, Finland, France, Germany, Gibraltar, Greece, Iceland, Italy Liechtenstein, Luxembourg, The Netherlands, Norway, Portugal, Republic of Ireland, Romania Spain, Sweden, Gibraltar, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.
Switzerland has also agreed to apply these rules.
If you are a career diplomat, civil servant, or are treated as a civil servant by the country that sent you, you will remain subject to the legislation of that country.
All other employees will pay Class 1 National Insurance and be covered by the UK Social Security scheme.
Unless all of the following apply to you:
If you work for an Embassy, High Commission or Consulate, except those representing other EEA countries, as a member of the diplomatic, administrative, technical or domestic staff, you will not have to pay National Insurance contributions if you are both:
Other employees are required to pay Class 1 National Insurance.
If the Embassy, High Commission or Consulate is exempt National Insurance in the UK, and will not volunteer to operate National Insurance on your behalf, you will be responsible for paying your own employee Class 1 National Insurance out of your pay direct to HMRC.
Generally, if you work for an international organisation with a 'place of business' in the UK, you will have to pay Class 1 contributions in the normal way. International organisations are generally organisations set up under International Treaties and agreements.
However, some organisations have obtained exemption for employees who are:
If you do not have to pay, but you want to protect your entitlement to UK basic retirement pension, ask about paying voluntary contributions.
HM Revenue & Customs
National Insurance Contributions Office
Benton Park View
Newcastle upon Tyne
NE98 1ZZ
Tel: 0845 302 1479
If you need advice on Income Tax, please contact:
The Diplomatic Liaison Officer
HM Revenue & Customs
2 South Government Buildings
Ty Glas Road
Llanishen
Cardiff
CF14 5XZ
or Tel: 02920 326 203
Even if they are not liable for employer contributions, your employer may volunteer to operate National Insurance on your behalf.
If your employer volunteers to operate National Insurance on your behalf, and deducts Class 1 employee National Insurance from your pay, you will not be required to operate a Direct Payment scheme.
If your employer:
If you are an employee of an Embassy, High Commission or Consulate and you are unsure whether you are liable to pay UK tax, you must contact:
The Diplomatic Liaison Officer
HM Revenue & Customs
2 South Government Buildings
Ty Glas Road
Llanishen
Cardiff
CF14 5XZ
or Tel: 02920 326 203
If you have to operate your own PAYE or National Insurance you must contact your local HMRC office to set up a Direct Payment scheme.
There are two types of Direct Payment scheme involving National Insurance:
Commonly known as 'PAYE Direct Payments procedures'.
A DPNI scheme type is appropriate where the normal PAYE procedures are unsuitable. The employee is responsible for the deduction of his or her own Income Tax and employees share of National Insurance contributions.
A DCNI scheme type is appropriate when a simplified PAYE scheme is required to enable direct payments of National Insurance (only).
Detailed instruction on how to operate National Insurance contributions are contained in leaflet 'CWG2 Employers Further Guide to PAYE and NICs' and leaflet 'P49 Paying Someone for the First Time'.
When you register with HMRC for a Direct Payment scheme you will be issued with a pack containing the forms you need.
You will pay either:
Work out your National Insurance contributions using table 'CA40 Employee only contribution tables for employers'. Use table A if you are paying standard rate National Insurance contributions. Use table B if you are paying at the reduced rate.
Use the weekly or monthly tables depending on how often you are paid. If you are not paid weekly or monthly, follow the instructions in leaflet 'CWG2 Employers Further Guide to PAYE and NICs'.
Find the figure on the contribution table that equals your gross earnings paid in that week or month. If the table does not show your exact gross earnings, use the next lowest figure in the table. Use your gross earnings before any deductions, not just the pay you get in the UK. This means that you may have to convert payments in other currencies to sterling.
You will be issued with a form P11 DWS on which you will be required to record your personal details, accounts office reference, earnings and National Insurance. Instructions on how to do this are contained in leaflet 'P49 Paying Someone For the First Time'. If you do not have to pay tax, you need only follow the instructions relating to National Insurance.
You will be issued with payslips. Enter your Class 1 contributions on the payslip (P30(BC)) before you send it to the HMRC Accounts Office. Send the payment and the payslip to the Accounts Office when you pay your tax. Keep a record of your payment on page 5 of the payslip booklet. If you do not pay tax, send your payment by the dates shown on the payslips (P30(BC)).
On 5 April, at the end of the tax year, you should add up the columns on the DWS and enter them with the contribution table letter in the corresponding totals boxes on form P14. If your contribution table letter has changed during the year, use a separate line for each letter used and the Class 1 contributions total for it. You will be required to send this form to HMRC after the end of the tax year. The total pay must be shown in every case.
Make sure:
You should put the DWS in a safe place. You must keep it for three years.
Send:
